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2009 AEC- Chinese Economic Dominance in Mauritius

10-Nov-2009

Recent studies of the impact of China’s rise on the economies of sub-Saharan Africa generally find that the resource-rich countries of the sub-continent will gain while those that compete with China in export markets will invariably lose. Mauritius, with no exploitable natural resources, and facing acute Chinese competition in its traditional markets, is a most likely candidate to suffer China’s onslaught. This paper argues that China’s economic rise can benefit Mauritius. Analyzing the impact of China through the channels of trade, aid and investment, we show that preference erosion, not China’s emergence, is to blame for the drastic loss of jobs in the clothing industry. This industry, however, has proved resilient since exports are back on a rising trend. On the other hand, Chinese aid to finance construction and infrastructure projects has been a welcome relief, even when it has been tied to the use of Chinese labour and inputs. The most significant benefits of China’s engagement are likely to occur in the area of investment as China strategically uses Mauritius as a platform to penetrate the African market.

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